16‐3743‐cv
Sentry Ins. a Mut. Co. v. Weber, et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC
DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second
2 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley
3 Square, in the City of New York, on the 27th day of December, two thousand
4 seventeen.
5
6 PRESENT: GUIDO CALABRESI,
7 RAYMOND J. LOHIER, JR.,
8 Circuit Judges,
9 EDWARD R. KORMAN,
10 District Judge.*
11 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
12 SENTRY INSURANCE A MUTUAL COMPANY,
13
14 Plaintiff‐Appellee,
15
16 v. No. 16‐3743‐cv
17
18 HERSHEL WEBER,
19
20 Defendant‐Appellant,
21
22 BRAND MANAGEMENT INC., AKA BUDGET
* Judge Edward R. Korman, of the United States District Court for the Eastern
District of New York, sitting by designation.
1 SERVICES INC., DYNAMIC CLAIM SERVICES,
2 INC., BUDGET SERVICES INC.,
3
4 Defendants.
5 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
6 FOR APPELLANT: Avrom R. Vann, New York, NY.
7
8 FOR APPELLEE: Stephen R. Harris, Laura M. Zulick, Drinker
9 Biddle & Reath LLP, Philadelphia, PA.
10
11
12 Appeal from a judgment of the United States District Court for the Eastern
13 District of New York (Eric N. Vitaliano, Judge).
14 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
15 AND DECREED that the judgment of the District Court is AFFIRMED.
16 Hershel Weber appeals from a judgment of the District Court (Vitaliano, J.)
17 granting summary judgment in favor of Sentry Insurance a Mutual Company
18 (“Sentry”) and denying the defendants’ cross‐motion for summary judgment.
19 We assume the parties= familiarity with the facts and record of the prior
20 proceedings, to which we refer only as necessary to explain our decision to affirm.
21 1. Preclusion Order
22 Weber argues that the District Court abused its discretion by precluding
23 him from offering evidence to oppose Sentry’s alter ego claim as a sanction for
24 discovery violations. We disagree. Federal Rule of Civil Procedure 37 gives
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1 courts broad discretion to sanction parties who fail to obey discovery orders,
2 including the discretion to preclude “the disobedient party from supporting or
3 opposing designated claims or defenses.” Fed. R. Civ. P. 37(b)(2)(A)(ii). Several
4 factors guide our review, including “(1) the willfulness of the non‐compliant
5 party . . . ; (2) the efficacy of lesser sanctions; (3) the duration of the period of
6 noncompliance; and (4) whether the non‐compliant party had been warned of the
7 consequences of noncompliance.” S. New England Tel. Co. v. Global NAPs Inc.,
8 624 F.3d 123, 144 (2d Cir. 2010) (quotation marks omitted). The sanction must
9 also “relate to the particular claim to which the discovery order was addressed.”
10 Daval Steel Prods., a Div. of Francosteel Corp. v. M/V Fakredine, 951 F.2d 1357,
11 1366 (2d Cir. 1991).
12 The record supports the determination that the defendants engaged in
13 willful, bad‐faith discovery conduct; monetary sanctions had repeatedly proven
14 ineffective to secure the defendants’ compliance with Judge Mann’s orders; and
15 the defendants violated multiple compulsion orders over a year‐long period.
16 Judge Mann repeatedly warned Weber that further noncompliance could result in
17 severe sanctions, including preclusion. And because most of the delayed and
18 outstanding production of documents related to entities controlled by Weber (and
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1 therefore to Sentry’s alter ego claim), the preclusion order was well tailored to the
2 defendants’ noncompliance. Contrary to Weber’s contention, Sentry was not
3 required to show prejudice resulting from the defendants’ misconduct. See S.
4 New England Tel. Co., 624 F.3d at 148–49. We also reject Weber’s argument that
5 the sanction was an abuse of discretion because it resulted in the entry of a $12.5
6 million judgment against him. A sanction “must be commensurate with the
7 non‐compliance.” Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130, 140
8 (2d Cir. 2007). Under the circumstances of this case, the sanction was
9 appropriately commensurate. See Sieck v. Russo, 869 F.2d 131, 134 (2d Cir.
10 1989). Finally, we reject Weber’s contention that the District Court failed to
11 consider and exhaust alternative sanctions because the sanction imposed is
12 “appropriate on the overall record.” S. New England Tel. Co., 624 F.3d at 148.
13 2. Partial Summary Judgment Order
14 The District Court also properly granted Sentry’s motion for partial
15 summary judgment on its alter ego claim. Under New York law, an owner is
16 liable for the acts of a corporation when the corporation is merely an “alter ego”
17 of the owner. See Carte Blanche (Sing.) Pte., Ltd. v. Diners Club Int’l, Inc., 2 F.3d
18 24, 26 (2d Cir. 1993). A party seeking to pierce the corporate veil, and thereby
4
1 hold an owner liable, must show that (1) “the owner exercised complete
2 domination over the corporation with respect to the transaction at issue,” and (2)
3 “such domination was used to commit a fraud or wrong that injured the party
4 seeking to pierce the veil.” MAG Portfolio Consult, GMBH v. Merlin Biomed
5 Grp. LLC, 268 F.3d 58, 63 (2d Cir. 2001) (quotation marks omitted).
6 We first reject Weber’s argument that Sentry failed to adequately plead its
7 alter ego claim. Sentry’s complaint against Budget Services Inc. (“Budget”) and
8 Weber contains sufficiently specific factual allegations that Weber dominated
9 Brand Management Inc. (“Brand”) and Budget and that he used his domination to
10 avoid the corporations’ contractual obligations to Sentry. To the extent Weber
11 now argues that Sentry failed to plead an alter ego claim in its complaint against
12 Brand, and that the District Court therefore could not determine that Brand is
13 Weber’s alter ego, Weber failed to raise this argument in the District Court and
14 has forfeited it. See Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1077 (2d Cir. 1993).
15 We also reject Weber’s argument that, even if Sentry adequately pleaded its
16 alter ego claim, summary judgment was nonetheless improper because
17 (1) genuine disputes of material fact remain and (2) Sentry did not establish the
18 elements of its alter ego claim as to Budget. We are not persuaded. First,
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1 because of the District Court’s preclusion order, there was no evidence properly
2 before the District Court that created a genuine factual dispute. Second, the
3 District Court correctly concluded, based on the factors described in Wm.
4 Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131, 139 (2d
5 Cir. 1991), that Sentry demonstrated that both Brand and Budget are Weber’s alter
6 egos.
7 We have considered Weber’s remaining arguments and conclude that they
8 are without merit. For the foregoing reasons, the judgment of the District Court
9 is AFFIRMED.
10 FOR THE COURT:
11 Catherine O=Hagan Wolfe, Clerk of Court
12
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